Defying expectations, the unemployment rate in the US unexpectedly decreased from 4.4 percent to 4.3 percent. The more surprising aspect was the surge in US non-farm payrolls, which jumped from an anticipated 48,000 to 178,000 for March. Meanwhile, February’s figures were revised from -92,000 to -133,000.
These developments are unlikely to persuade the Federal Reserve to consider a rate cut; especially, given the soaring energy costs, and a clearer understanding of the situation will emerge in the coming months.
Impact of oil prices
The recent rise in oil prices is driven by a wave of supply-side inflation, which poses challenges since the inflation that central banks typically address is demand-side, often triggered by consumers holding onto cash.
In the current context, if the oil shock persists, the Federal Reserve may be compelled to raise interest rates due to inflation pressures from elevated energy prices. However, under such circumstances, monetary policy might be rendered ineffective.
One could argue that the Strait of Hormuz is not entirely blocked, as it remains operational with ships passing through.
However, even if it officially reopens, full operational capacity cannot be resumed right away due to various factors. First, there needs to be an assessment of the infrastructure damage and the time and funding necessary for repairs. Insurance premiums will play a crucial role in determining shipment costs, and the associated security risks will be a significant concern for restoring normal operations.
The ongoing conflict in the Middle East is putting considerable strain on the global economy, primarily due to rising fuel prices that could prompt central banks to increase interest rates, as they focus on combating inflation.
Examining the broader economic landscape, the dynamics within global financial markets appear altered and challenging.
The uncertainty surrounding the reopening of the Strait of Hormuz has negatively impacted the overall global economic outlook.
There has been a noticeable shift in perceptions regarding growth and inflation due to the steep rise in oil prices, resulting in increased demand for the US dollar as a safe haven.
The conflict in the Middle East is exerting pressure on stocks and bonds, with geopolitical risks affecting most other asset classes.
The energy shock has also negatively impacted currencies, particularly the Pound Sterling and Japanese Yen, which have been hit hard due to their economies dependence on energy imports, making their public finances vulnerable in this environment.
Meanwhile, Donald Trump’s unexpected comments have taken the oil market by surprise. The general expectation was that the US would withdraw from the Gulf conflict, but the President’s remarks about using military action against Iran caused oil prices to spike, as hopes for diplomatic solutions quickly faded.
His statement about intensified military pressure over the next two to three weeks suggests that the possibility of a reversal in oil prices will remain limited in the near term, keeping risks tilted upward.
There is potential for an upward movement, but it must exceed USD 118 in order to reach USD 124. On the downside, the crucial support level to monitor for Brent oil is between USD 100 and 102. A drop below this range could trigger a decline to USD 92.
Gold
Regarding the future direction of gold, much will hinge on the outcome and geopolitical consequences of current events. The situation remains quite uncertain. There has been a slowdown in demand for gold from central banks and investors, with trading volumes decreasing due to liquidity concerns.
Meanwhile, the increasing oil prices are drawing investor’s attention. This dynamic is likely to keep gold prices fluctuating and restrained when they rise. The ongoing struggle between bulls and bears will persist, as gold holders and investors will continue to purchase during price dips.
Elevated inflation does not favour a reduction in interest rates, which further poses challenges for gold.
As long as the Gulf War remains unresolved, US economic data is unlikely to significantly influence currencies and some of the major assets.
WEEKLY OUTLOOK - APR 6-10
GOLD @ USD 4678- At first, gold might make an upward attempt, but it will need to rise above USD 4790 to reach USD 4880. After a brief up move I am expecting gold to drop. On the lower end, it must fall below USD 4510 in order to target USD 4450 or lower. Trading conditions will be challenging because of high volatility.
EURO @ 1.1517 - The Euro might find it difficult to rise above 1.1630-40. However, if it breaks below 1.1420, it could lead to a test of 1.1335.
GBP @ 1.3194- Pound Sterling might experience a short uptick following a sluggish beginning. However, it is unlikely that it will surpass 1.3320. On the downside, a decisive drop below 1.3105 could trigger a move toward 1.3060.
JPY @ 159.59- The $/YEN pair is likely to stay exposed to risks because of persistent geopolitical tensions. A correction is possible, with key levels to monitor being 157.70-80. To rise, it must break above 160.80 to reach 161.50. However, on the downside, it is important to watch 157.10.
Copyright Business Recorder, 2026
The writer is former Country Treasurer of Chase Manhattan Bank. The views expressed in this article are not necessarily those of the newspaper
He tweets @asadcmka
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